In my humble opinion, the best renovations that improve your quality of life are: roof, HVAC (air-conditioning), elevators and bathrooms. Interestingly enough, three of the four are rarely if ever fully appreciated by tenants – until they begin breaking. Roofs and elevators are perhaps the most expensive items and yet nobody really sees what goes on. These improvements run into the hundred of thousands of dollars easily.
When you are a large tenant (10,000 sf and higher), you can sometimes dictate when and what renovations will take place. On several occasions a landlord has promised to renovate bathrooms or install a new roof. My philosophy is that a landlord should walk the walk and put those promises into the lease. This is just one more tactic that goes into my lease negotiations for my clients.
Over the past several years as office vacancy increased, many institutional landlords decided to put money into their buildings so they would be updated and ready to go when the economy began improving. Their reasoning is twofold – first it is a sound management practice to keep the buildings running efficiently and the second reason is that renovated common areas help leasing efforts. The good thing about these major renovations is that these are capital improvements and do not find their way into your operating expenses. Sometimes the right improvements (new HVAC or windows) can provide a small reduction in your operating expenses.
Right now there is a building that just installed new, very expensive marble floor on their expansive ground floor lobby. Unfortunately one of the three stones doesn’t match and the chosen pattern hasn’t been popular with tenants. Keep in mind that this project cost well over $100,000. Now the tenants are stuck with it for the next decade. When your landlord announces a renovation, take note because you are the one that has to live with it. Just like when my husband pick the paint for our bedroom – four years later I still haven’t gotten use to it.